Mesabi Nugget 'Good to go' - Steel Dynamics, Inc.
Mesabi Nugget 'Good to go' - Steel Dynamics, Inc.
Mesabi Nugget 'Good to go' - Steel Dynamics, Inc.
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A publication for employees and friends of<br />
<strong>Mesabi</strong> <strong>Nugget</strong><br />
‘Good <strong>to</strong> go’<br />
Minnesota plant <strong>to</strong> supply<br />
high-purity iron <strong>to</strong> SDI’s<br />
Indiana steel mills.<br />
ISSUE 22 inside: Third-quarter update Healthy choices Bennett’s need for speed
COVER<br />
Starting up<br />
<strong>Mesabi</strong> <strong>Nugget</strong> will be the first<br />
plant in the world <strong>to</strong> produce<br />
iron commercially using the<br />
revolutionary ITmk3® process.<br />
Be it a warm summer morning or a frigid, windy winter<br />
afternoon, over the past two years construction of the <strong>Mesabi</strong><br />
<strong>Nugget</strong> project progressed at a brisk pace. Site preparation at<br />
Hoyt Lakes, on the <strong>Mesabi</strong> Iron Range in the wilds of northeastern<br />
Minnesota, began in the fall of 2007. Through two winters and two<br />
summers construction and equipment installation proceeded <strong>to</strong> bring<br />
the new operation <strong>to</strong> its current start-up phase in December 2009.<br />
At one point this past summer, more than a thousand construction<br />
workers were on site, tasked in a variety of activities. This was not<br />
a simple, run-of-the-mill construction project. The facility includes<br />
more than a dozen interconnected structures, some huge and some<br />
small, tied <strong>to</strong>gether with now unseen underground utilities. The<br />
project also includes myriad materials handling machines conveying<br />
resources from area <strong>to</strong> area. Together these components comprise<br />
a well-coordinated complex designed <strong>to</strong> produce iron nuggets<br />
continuously at a rate of 500,000 <strong>to</strong>nnes or more per year.<br />
Mark Millett, who heads up SDI’s ferrous resources initiatives<br />
as well as metals recycling, says, “We are very excited about the<br />
opportunity presented by <strong>Mesabi</strong> <strong>Nugget</strong>. Uniquely, SDI is<br />
developing a captive domestic supply of high-quality pig iron. We<br />
are optimistic that in the coming years this Iron<br />
Iron provided by<br />
Range project will come <strong>to</strong> differentiate SDI<br />
among U.S steelmakers and help <strong>to</strong> underpin <strong>Mesabi</strong> <strong>Nugget</strong><br />
SDI’s continued growth in steelmaking. Like will help <strong>to</strong><br />
our investment in OmniSource that gives our underpin SDI’s<br />
steel mills better access <strong>to</strong> scrap metal, SDI’s<br />
continued growth<br />
strategic commitment <strong>to</strong> ironmaking will help<br />
<strong>to</strong> assure our steel mills’ long term success. in steelmaking.<br />
“Our <strong>Mesabi</strong> team and contrac<strong>to</strong>rs have done an outstanding job of<br />
keeping this project on track, despite extreme weather conditions and<br />
working in a remote, isolated area. We also salute the numerous<br />
engineers and operating personnel from Iron <strong>Dynamics</strong> and <strong>Steel</strong><br />
<strong>Dynamics</strong> who have contributed their knowledge and expertise.<br />
“We are very happy <strong>to</strong> have the support of our new neighbors<br />
on the Iron Range and the backing of the State of Minnesota.<br />
The <strong>Mesabi</strong> <strong>Nugget</strong> plant will run with crews and staff of about<br />
75 people. Many of these hail from upstate Minnesota,” Millett said.<br />
COVER<br />
A breakthrough technology<br />
<strong>Steel</strong> <strong>Dynamics</strong> made its initial commitment <strong>to</strong> the ITmk3 ®<br />
technology that is employed at the new <strong>Mesabi</strong> <strong>Nugget</strong> plant in<br />
First helpers Jeff Erickson and<br />
James Cone, with supervisor<br />
Steve Burgess, oversee the mixing,<br />
balling, and drying operations.<br />
MESABI NUGGET PRODUCTION FLOW<br />
Caption<br />
PULVERIZED<br />
COAL<br />
FLUX AND BINDER<br />
Iron ore<br />
concentrate<br />
DRY BALLS<br />
NUGGETS<br />
SLAG<br />
A large balling drum tumbles a moist mixture of three materials (at far left) <strong>to</strong> form balls<br />
that are about 3/4 of an inch in diameter. The balls are then dried in the oven shown at<br />
left, after which they go <strong>to</strong> the rotary-hearth furnace.<br />
ITmk3® is a registered trademark of Kobe <strong>Steel</strong>, Ltd.<br />
2 STEEL DYNAMICS DYNAMIC DETAILS 3
COVER<br />
2001. Along with several other partners, SDI invested in a pilot<br />
demonstration plant, also in Minnesota, that successfully produced<br />
the first <strong>Mesabi</strong> iron nuggets in 2004. Having proved the viability<br />
of the process by producing nearly 10,000 metric <strong>to</strong>ns of nuggets in<br />
231 days of operation, the pilot plant was shut down <strong>to</strong> prepare for<br />
a larger, commercial facility. The nearly pure iron nuggets from the<br />
pilot plant were tested in the melt shop at SDI’s<br />
This new process Butler Flat Roll mill, where they were found <strong>to</strong><br />
is both more have ideal characteristics for mini-mill<br />
energy efficient steelmaking.<br />
To produce some types of steel products—<br />
and more<br />
flat rolled steel, railroad rail, and certain<br />
environmentally high-end alloyed special-bar-quality (SBQ)<br />
friendly than steels—iron is needed in mini-mill steelmaking<br />
blast furnace <strong>to</strong> supplement scrap steel. Most mini mills<br />
meet their need for iron by relying on pig iron<br />
technology.<br />
ingots imported from South America or other<br />
parts of the world. Virtually since its founding, <strong>Steel</strong> <strong>Dynamics</strong> has<br />
sought <strong>to</strong> develop an internal supply of iron units <strong>to</strong> reduce its<br />
dependence on foreign sources. Iron <strong>Dynamics</strong>, which started up in<br />
1998, serves this need (see page 12), but the ITmk3 ® process<br />
promises <strong>to</strong> produce iron at lower cost and in higher volumes.<br />
The ITmk3 ® process was developed by Kobe <strong>Steel</strong>, Ltd., of Japan.<br />
Kobe and its subsidiaries contributed much of the design and<br />
technology employed in the new plant. The <strong>Mesabi</strong> <strong>Nugget</strong> plant is<br />
officially designated as an LSDP—Large-scale Demonstration Plant,<br />
because it is the first ITmk3 ® plant capable of high-volume<br />
production of iron nuggets.<br />
SDI owns 81 percent of <strong>Mesabi</strong> <strong>Nugget</strong> and Kobe <strong>Steel</strong>, 19<br />
percent. The companies shared in the investment in the facility and<br />
will share in the profits. Most of the <strong>Mesabi</strong> nuggets produced by the<br />
plant will be sold <strong>to</strong> <strong>Steel</strong> <strong>Dynamics</strong> and will be shipped by rail <strong>to</strong><br />
SDI’s three Indiana mini mills, primarily <strong>to</strong> Butler.<br />
Steve Rutherford, <strong>Mesabi</strong> <strong>Nugget</strong> engineering manager, says,<br />
“The ITmk3 ® process is truly a game-changing process—the third<br />
generation in ironmaking technology. It goes beyond blast furnaces<br />
and beyond natural-gas-based processes, offering simplicity and<br />
lower costs than older processes—both capital and ongoing<br />
operating costs. <strong>Mesabi</strong> <strong>Nugget</strong> promises <strong>to</strong> be both environmentally<br />
Conveyor and concentra<strong>to</strong>r building<br />
Clarifier<br />
Filtering<br />
Iron ore concentrate<br />
Iron processing<br />
Clarifier<br />
Slurry<br />
lines<br />
Iron ore<br />
concentrate<br />
Filtering<br />
Reductant<br />
(coal)<br />
Coal<br />
Crushing<br />
and drying<br />
Conveyor stacking coal<br />
Slurry lines<br />
Mixing Balling Drying<br />
Mixing<br />
ITmk3® Process Flow<br />
Balling<br />
Rotary Hearth Furnace (RHF)<br />
Heat recovery<br />
(pho<strong>to</strong> from pilot plant 2004)<br />
Air<br />
Rotary Hearth Furnace<br />
Heat<br />
recovery<br />
Flue Gas<br />
Offgas treatment<br />
COVER<br />
For a more detailed discussion<br />
of iron-making at <strong>Mesabi</strong> <strong>Nugget</strong>,<br />
please see the <strong>Steel</strong> <strong>Dynamics</strong> Web site:<br />
www.steeldynamics.com/mesabi/overview.pdf.<br />
Cooling<br />
Separation<br />
Separation<br />
In December 2007, the first concrete foundations were poured for the 180-foot-diameter<br />
rotary-hearth furnace. Two years later, the completed furnace is enclosed in a large<br />
building, ready <strong>to</strong> begin operation.<br />
Conveyors <strong>to</strong> output nuggets and slag<br />
4 STEEL DYNAMICS DYNAMIC DETAILS 5<br />
Slag<br />
Iron <strong>Nugget</strong>s<br />
ITmk3® is a registered trademark of Kobe <strong>Steel</strong>, Ltd.
COVER<br />
friendly and more energy efficient,<br />
reducing emissions by more than<br />
40 percent compared <strong>to</strong> current<br />
processes and using 30 percent less<br />
energy than integrated steelmaking.”<br />
What comes next<br />
While expectations for the new<br />
<strong>Mesabi</strong> <strong>Nugget</strong> plant are high as<br />
commissioning begins, it will likely<br />
take a year or more <strong>to</strong> fully examine<br />
how well the technology works,<br />
resolve any technical or operational<br />
issues, and examine financial<br />
performance. If the process works well<br />
and volume ramps up as expected<br />
<strong>to</strong>ward the plant’s design capacity,<br />
further investment is possible. In<br />
constructing the infrastructure <strong>to</strong><br />
support the first plant, plans were<br />
made <strong>to</strong> add two, and possibly three,<br />
additional modules at the site, each<br />
having a similar production capacity <strong>to</strong><br />
the first. Of course, the financial<br />
performance of the project will be a<br />
major part of the decision-making<br />
process regarding expansion.<br />
SDI’s board of direc<strong>to</strong>rs and executive officers got a firsthand look at the new facility, visiting the<br />
plant during their board meeting in August. They were impressed by the scope of the project and<br />
the scale of the facilities.<br />
The <strong>Mesabi</strong> <strong>Nugget</strong> plant was<br />
located on the Iron Range because of<br />
the proximity <strong>to</strong> iron ore there. SDI<br />
expects, in time, <strong>to</strong> be able <strong>to</strong> utilize<br />
iron ore concentrate that is provided by<br />
an SDI-owned iron ore mine on the site.<br />
Originally, the approval of the<br />
environmental permits that would allow<br />
mining activity <strong>to</strong> resume was expected<br />
by the end of 2009. Now, it is believed<br />
that a permit will not be issued until the<br />
fall of 2010, in which case, mining could<br />
not start until the end of 2011. <strong>Steel</strong><br />
<strong>Dynamics</strong> owns about 6,000 iron-rich<br />
acres holding reserves that would meet<br />
nugget-plant iron needs for 50 years or<br />
more, plus SDI holds options <strong>to</strong> buy, or<br />
has mineral rights on, an additional<br />
9,000 acres.<br />
In the meantime, the team in<br />
Minnesota will be busy ramping<br />
up production of iron nuggets at<br />
the world’s first ITmk3 ® plant, and<br />
fine-tuning the plant <strong>to</strong> achieve<br />
maximum production over the<br />
next couple of years. n<br />
97˚<br />
96˚<br />
Minnesota Mining: The Iron Range of northeastern<br />
Minnesota (see map) produces 75 percent of the iron ore mined<br />
95˚<br />
94˚<br />
93˚<br />
92˚<br />
91˚<br />
90˚<br />
in the United States (40 million <strong>to</strong>ns annually). In the future,<br />
SDI plans <strong>to</strong> mine taconite from the area surrounding the plant<br />
(aerial pho<strong>to</strong>) and concentrate it for use in the nugget plant.<br />
For now, iron ore concentrate is purchased and loaded on<strong>to</strong><br />
a conveyor leading <strong>to</strong> the concentra<strong>to</strong>r building.<br />
49˚<br />
C ANADA<br />
48˚<br />
MESABI IRON RANGE<br />
MESABI NUGGET<br />
Hoyt Lakes<br />
Lake Superior<br />
47˚<br />
MINNESOTA<br />
WISCONSIN<br />
46˚<br />
Minneapolis<br />
Saint Paul<br />
45˚<br />
44˚<br />
Sioux Falls<br />
97˚<br />
96˚<br />
95˚<br />
94˚<br />
93˚<br />
92˚<br />
91˚<br />
90˚<br />
<strong>Mesabi</strong> <strong>Nugget</strong> aerial pho<strong>to</strong>s courtesy of Aero-environmental Consulting.<br />
6 STEEL DYNAMICS
Corporate Office<br />
7575 West Jefferson Boulevard<br />
Fort Wayne, Indiana 46804<br />
www.steeldynamics.com<br />
ON THE COVER<br />
Electricians Ed<br />
Lach and Nathan<br />
Lay discuss the<br />
start-up of the<br />
<strong>Mesabi</strong> rotary<br />
hearth furnace<br />
with Plant Manager<br />
Jeff Hansen.<br />
Dynamic Details is published for the employees<br />
and friends of <strong>Steel</strong> <strong>Dynamics</strong>.<br />
Fred Warner, edi<strong>to</strong>r.<br />
Articles may be reproduced with permission.<br />
For information, contact Fred Warner, inves<strong>to</strong>r<br />
relations manager, at (260) 969-3564 or by<br />
e-mail at f.warner@steeldynamics.com.<br />
Issue 22, December 2009<br />
This publication contains predictive statements about<br />
future events. These statements are intended <strong>to</strong> be<br />
made as “forward-looking” within the safe-harbor<br />
protections of the Private Securities Litigation Reform<br />
Act of 1995. Reference is made <strong>to</strong> SDI’s detailed explanation<br />
of the many fac<strong>to</strong>rs and risks that may cause<br />
such predictive statements <strong>to</strong> turn out differently, as<br />
set forth in SDI’s most recent Annual Report on Form<br />
10-K and other reports from time <strong>to</strong> time filed with the<br />
Securities and Exchange Commission, available publicly<br />
on the SEC’s Web site.<br />
© 2009 <strong>Steel</strong> <strong>Dynamics</strong>, <strong>Inc</strong>.<br />
MESABI NUGGET<br />
1<br />
2<br />
3<br />
4<br />
8<br />
5<br />
6<br />
7<br />
1 Concentra<strong>to</strong>r<br />
2 Slurry lines<br />
3 Filtering<br />
4 Mixing, balling,<br />
and drying<br />
5 Rotary hearth furnace<br />
6 Water treatment<br />
7 Waste water treatment<br />
8 Mercury filter<br />
9 Rail car dumper<br />
<strong>Mesabi</strong> <strong>Nugget</strong> aerial pho<strong>to</strong>s courtesy of Aero-environmental Consulting.<br />
The dawn of a new age of iron<br />
Construction at the <strong>Mesabi</strong> <strong>Nugget</strong> facility is nearly complete,<br />
with production beginning this month. The aerial pho<strong>to</strong> above,<br />
taken in late November, identifies the buildings on the site. In the<br />
picture at left, steam rises as the heat-up of the <strong>Mesabi</strong> <strong>Nugget</strong><br />
rotary-hearth furnace begins. See related s<strong>to</strong>ry on page 2.